Sunday, August 09, 2009

Previously I've asked, "what is the problem with a free people in a democracy voting to tax themselves to pay for healthcare?"
One thing I've discovered on Twitter is that if you really push and nudge a conservative, pointing out to them that the majority in the US voted for Obama and his agenda including Obama's campaign promise of universal healthcare, they will finally admit that they hate democracy.

The question is, why do they hate democracy? They give nonsense answers. For example, they say "the majority will vote to take the wealth away from the producers of wealth". But in any economy, the majority are employed workers who are producing wealth with every widget they make or every widget they sell or every medical treatment they provide. At which point things start getting clearer: They're afraid that the PRODUCERS of wealth might take some of that wealth back from the PROFITEERS who make billions off the labor of others.

In any modern economy, scale dictates that the majority of people will be working for others. A semiconductor foundry costs $5 billion dollars to build and employes hundreds of people. This means you will need a bunch of people with a lot of money to invest in order to build this thing.

But once it is built, then every single dollar produced by the semiconductor foundry is produced by its workers and by the sales and distribution people who move its output to where it's needed. The executive class and the ownership class are not producing any wealth at that point. The owners are simply taking the wealth that others produced in exchange for the initial startup capital, while the executive class is merely defending the owners' interests and doing the transferring of wealth to the owners. The problem is that in our economy, this process has gone whack. See this graph:

As you can see, the pay of the executive class has skyrocketed over the past thirty years by comparison to that of the producers of wealth, the workers who actually create and distribute the products that the executives are profiting from. And this is matched by skyrocketing wealth of the ownership class, the top 10% of Americans who own 90% of America:

In a democracy, the producers of wealth -- the workers of companies without whom companies would have no product to sell and no way to ship it -- would vote to redistribute wealth from the owner and executive classes to the producer class in the form of desired government services such as healthcare, in the form of additional benefits such as more weeks of paid vacation in a year, and in the form of increased ability to bargain collectively for higher wages. In a democracy, the producers of wealth would redistribute wealth from those who profit from their production of wealth to those who actually produce wealth -- the actual workers, without whom companies have no product. And in fact, if you look at functioning democracies such as Sweden (the most democratic nation on planet Earth according to the right-wing journal, The Economist), you will see this in action. Sweden taxes the executive and ownership class heavily in order to provide services such as free education from preschool all the way through graduate school, free healthcare, and so forth to the workers, the actual producers of wealth. Thus Sweden's income distribution looks quite different from the U.S. income distribution:

In other words, the reason conservatives hate democracy is because democracy is inherently socialist -- i.e., the worker majority in a democracy will inherently choose to tax the ownership and executive minority classes in order to redistribute the wealth created by workers back to the workers that created the wealth and out of the hands of the executive and ownership classes that are profiting from the labors of the workers. As the example of Sweden above shows, they will still allow the executive and ownership classes to keep enough of the income produced by workers so that they're still making more money than the workers. But it's more like the 2x of worker income that characterized the U.S. economy in the 1950's and 1960's, not the 4x+ of worker income that is true today.

So there you have it: Why is democracy hated by conservatives? Because it transfers wealth to the producers from those who profit from the labor of the producers. In short, because it is exactly the opposite of what conservatives claim socialism is when they claim socialism transfers from "producers" to "leeches". CEO's truly are leeches -- they produce not a single widget, design not a single piece of software, in short, they produce nothing yet profit from the labors of those who do produce everything that the company sells. Without the workers who design the products, who assemble the products, who sell and ship the products, the CEO has nothing, less than nothing since he has no skills that could be useful other than the ability to spew bullshit. Yet this small collection of leeches benefit hugely from the labor of the workers who design and create the products that they profit from. This isn't to say that we don't need CEO's. As I pointed out previously, the CEO is fundamentally the guardian of the interests of the ownership class, and responsible for making sure that the ownership class gets a return on their investment in the business. But clearly we don't need CEO's making 400x what workers make, and clearly American democracy is broken when that's happening. Which we already knew... otherwise the workers, who are the majority, would have already voted to tax CEO's to the point where they were making only 20x what workers make again. Democracy. Eeep! It's garlic to those who profit off the labor of others!

-- Badtux the Democracy Penguin

BTW, this is a huge refutation of the notion that Hitler was a socialist. Hitler liked to throw around socialist jargon in order to ingratiate himself to the German people, but his actual actions were to impoverish the workers and enrich the ownership class. One of Hitler's first acts, on May 2, 1933, was to outlaw labor unions and make strikes illegal -- one reason why prominent Republicans of the 1930's such as Prescott Bush loved Hitler. Worker income fell throughout the remainder of the 3rd Reich... according to the Reich Statistical Office, they declined from 20.4 cents an hour in 1932 to 19.5 cents by the middle of 1936 for skilled workers, and 16.1 cents to 13 cents per hour for unskilled labor. The share of all German workers of the national income fell from 56.9% in 1932 to 53.6% in 1938, while capital and business's share rose from 17.4% to 26.6%. Nazi Germany in short was the opposite of democratic socialism -- it transferred wealth from the working majority to the ownership minority, rather than from owners to workers as is true for democratic socialism. Hitler's "national socialism" may have thus been "socialism" in name, but certainly was not modern socialism as practiced by Sweden and other democracies in practice. (Note: All figures courtesy of The Rise and Fall of the Third Reich by William L. Shirer, which of course is not available on the Internet but you can check it out of the library and check page 264 for yourself).

Great analysis. That explains why the folks pulling the strings are doing what they're doing but not why the average white middle-aged male is so up in arms. those folks can't even articulate why they're foaming at the mouth about the evils of socialized medicine.

Thank you for an elightening post . You have most certainly and eloquently explained how the Nazis do come into play but not as most people today seem to understand . OK , I did study history some in high school but I remember little . I did however have relatives that had to flee Hitler's Germany , so I am very sensitive to the subject . The term Nazi is tossed around way too loosely today . a serious w3ski

Suzan: I was surprised when conservatives led me to the real reason they hate democracy. I had not realized that democracy is inherently socialist in nature. But it certainly explains some things that had puzzled me before.

True Blue, especially hilarious are the elders who show up at these meetings and shout "Keep your government hands off my Medicare!" Uhm, who, exactly, do they think is providing this Medicare? LOL!

I will be addressing the particular topic of why these folks are foaming at the mouth shortly, but three things come to mind: Racism, spite, and stupidity. More later, I typed half an article explicating on these and it deserves to be a full-fledged blog post :).

W3SKI, it was hard to track down the data on Nazi redistribution of wealth because the only place it seems to exist is dead trees in the library. I was reluctant to address the "Nazis were socialists too!" nonsense the right wing always brings up until I had that data. Now I have it, and it is compelling proof that the Nazis were a lot of things, but socialism as practiced by democracies was not one of them.

I'm with Tex, in that I wonder what it is that makes so many working-class people identify so blindly with their oppressors. It's gotta be some deep chink in the code of the brains emotiuonal psychology programming, because the enraged defence that reichtards make for it is based on feelings, and impervious to cool, reasoned logic. It's like the reaction of a 3-year-old screaming "No, I don't WANT to share my birthday cake with Susie!!!!!"

I have serious problems with your analysis but I'll just mention a few things in particular. First, you assume that once someone in the executive class acquires wealth, that it somehow disappears from the economy, unless of course the government takes it from the executive class and redistributes it to the working class.

The truth is that acquired wealth is reinvested in the economy in many ways. For example, the founders of PayPal acquired a considerable amount of wealth when their company was purchased by eBay. Those founders have since started several new ventures, including YouTube, Facebook, LinkedIn, Yelp, Tesla Motors, etc. And those companies provide JOBS to people, and good ones at that. And the founders of the new companies will acquire wealth and go on to start still more companies that will provide more JOBS, and so forth. The accumulated wealth is invested to create more wealth, and the cycles goes on. By redistributing the funds of the wealthy, you are in a sense retarding this process. You may be providing some government services to somebody, but certainly at the expense of jobs. Even if the wealth were just sitting in a bank account, those funds would likely be lent out to start a business, for example.

Secondly, often the truly wealthy will choose to "redistribute" their wealth via charitable activities. Consider for example, these private nonprofit charitable foundations from which everyone (including the working class) has benefitted: Ford Foundation, the Howard Hughes Medical Institute, the Bill and Melinda Gates Foundation, the Carnegie Foundations, Mellon Foundation, Robert Wood Johnson Foundation.

Thirdly, you assume that we live in some kind of class-based society where workers can only be workers. If you're good, you can start as a minimum-wage hourly employee at Wal-Mart and rise to an executive level one day. Also, if a worker puts some of his or her money into an investment account, or a 401k, they have a shares of ownership in public companies.

It is just plain wrong to assume that if someone acquires a certain threshold of wealth, then others are somehow entitled to a share of that wealth, even if the majority says so.

msgnet, you make some boners and have a couple of actual reality-based points within the mass of talking points that you just posted, unfortunately I am at a trade show and have limited bandwidth to reply. I will cut and paste your comment into an article with my reply interspersed when I get back home.

If "often" the wealthy are charitable, that means sometimes they aren't. Which is exactly the kind of manipulation of the existing power structures that assume the status quo is somehow ethically "neutral"--that is: it is RIGHT that some people inherit factories, and steal (extort; underpay for) the labor of the workers (of the factory they "own" which they "deserve" because they "inherited" it) to enrich themselves [further].

Money is not just magic paper--it is abstracted labor, the labor of someone. Once this is forgotten or not appreciated you have mine workers being killed for striking or refusing to be paid in "company store" dollars--a form of slavery, basically.

The means of production must belong to the worker; as long as the only "good" is profit, the well-being of the worker upon whose back the factory owner enriches himself is immaterial, irrelevant, and just plain annoying to the bottom line.

More people than you can count contribute to the wealth you "earn". You use the roads (for example) basically for free, and yet they are "yours" and you feel entitled to them. Yes, your tax dollars paid for them--but so did other peoples'. Why do they not profit from what is basically their investment in your (or any other) business that makes use of them?

The reasons conservatives hate democracy is that 1) they believe in society with stratified classes, because 2) humans are intrinsically no better than neutral on a good-evil scale, and therefore 3) need and deserve a ruling class (CEO's, frex) to lord over them, and a static society in which to do it. 4) The ruling class is inherently superior to the ruled.

This explains while the wealth producing jobs are going overseas: no pesky labor unions, or inconvenient environmental protection agencies to deal with, so there is little to keep the wealth produced by dollar-a-day workers from flowing directly into the hands of the profiteers. CEOs are handsomely compensated to assure that this happens.

msgnet - re: your first paragraph - consider the data represented by the current economic situation of the world. Wealth distribution (in the U.S.) is more widely askew than at any time since 1928. What happened then is happening now. World commerce is declining horribly. Check the baltic dry goods index.

You suppose this is a coincidence?

You go on to cite some examples of job creation and charitable activities. This falls into the category of true, but irrelevant. For the most part, high paying jobs are being replaced by low paying jobs. Real unemployment is around 16%. That about equivalent to 1935.

Finally, get born poor and you almost certainly will die poor. BT deals with that in another post.

In summary, your thoughts are out of contact with reality.

Just realized Sator Arepo beat me to it. Oh, well, we don't make exactly the same points in exactly the same way.

SA and JzB, it is true that some people inherit wealth and I suppose you deem that unfair. Instead I suppose that someone with a lot of money should be encouraged to dispose of that wealth either to charity, or possibly by riotous living, but either way one should not dare leave that wealth to their descendants, because that would put them at an unfair advantage over others, correct? What then, is the difference between inherited wealth and inherited genes? Is that not unfair? Is it fair that some young actress inherited beauty from her beautiful actor parents, which gives her an unfair advantage? Maybe then she should be disfigured at a young age to put her on more of a level playing field as other aspiring actors? Maybe her parents should be prohibited from having a child at all.

As for the exploitation of labor: Say I have some money that I wish to use to start a company. I need to hire a worker to do a certain job. What should I consider a fair wage? Should it be the going market rate for her particular skill set? Or should it be a wage that some government bureaucrats consider "fair", i.e., the minimum wage. If I paid her below the market rate for her labor, I guess you could consider that exploitation, but she would certainly leave to go somewhere else for the market rate. If I paid her more than the market rate (either by choice or by govt fiat), then that would harm my profits, and would certainly harm the ability of my business to expand and for me to hire more workers. See when I decided to invest my own money to start a business, I created a JOB for this person that didn't otherwise exist. By hiring this person I entered into a voluntary relationship from which we both benefit - she produces something and I pay for that production, simple as that. Why you call it exploitation is simply rhetoric.

Furthermore, you frown upon the corporations "exploiting" laborers in Third-World countries for a dollar a day, but ask the workers if they need those jobs, if they want those jobs? I suppose you were one of those sweatshop protesters. So let me ask you, are dollar a day jobs not the starting point for entry into the global economy? Did Japan, Singapore, Hong Kong, and South Korea not start from a similar point 40 years ago? And where are those countries now? Did the United States not have those factories 60 or 70 years ago? How would you seek to employ a Third-World worker? By offering him a job as a software engineer, or financial analyst? Please. You have to start somewhere, and the only way to employ poor unskilled uneducated workers is to hire them for low productivity jobs, often ones that only pay a dollar a day. In most cases the working conditions are deplorable, but much better than *any* alternative the workers have. When you protest these types of jobs you will simply move them elsewhere and harm the very workers you are trying to protect. If you're not convinced, just ask a few LIBERALS, like Nicholas Kristof, Paul Krugman, or Jeffrey Sachs.

JzB, conservatives don't in principle believe in classes but in practice they often grant special privileges to big business (via protective tariffs, subsidies, regulatory exemptions), and the end result is a very privileged class - the Bushes are a prime example. Liberals think it's better if the power is granted to their elected officials, but the assumption there is that you are somehow putting unselfish and ungreedy people in charge of selfish and greedy people. Unfortunately, those who seek elected office are usually by definition selfish and greedy. I say don't give power to either one.

JzB, if you are born poor you will most certainly die poor - probably. But I suppose you would say that is perfectly fine as long as *everyone* is born equally poor and dies equally poor. You say that wealth distribution is more askew at any time since 1928 and world commerce is on the decline. Yes, this is a coincidence. Correlation does not imply causation and there is no strong economic evidence that leads you to believe the declining BDI is due to a skewed wealth distribution.

Reminder: Posting rules prohibit insults and stupidity other than by the Penguin himself. Threatening violence against the lawfully elected government of the United States of America, a government elected by over 50% of Americans and still supported by over 50% of Americans, is stupidity of the most idiotic sort and automatically gets your post deleted. Adding on birther nonsense claiming that the Hawaii births registrar is part of some vast conspiracy against America as part of your attempt to justify wanting to overthrow a government that the vast majority of Americans support is just icing on the stupid cake.

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